I-773 will raise the current Washington state cigarette tax by $0.60 and impose a comparable surtax on other tobacco products. The additional tax revenues ($160 million in fiscal year 2003) will be used to:
- expand access to the Basic Health Plan (BHP),
- fully fund the state’s tobacco prevention and control program, and
- provide funding for other programs that effectively improve the health of low-income families in Washington state.
The expansion of these services to improve the health of Washington families will result in the following:
Increased Health Insurance Coverage through the Basic Health Plan
The Basic Health Plan (BHP) provides a no-frills package of health care coverage to Washington families with incomes at or below 58% of the state household median income (200% of the Federal Poverty Level). Typically, these are low-income working families whose employers do not provide health insurance. The participants pay a sliding scale premium share for their BHP coverage. Within two years, funding from the new tax will increase enrollment by 50,000 to cover 175,000 people.
Decreased Smoking and Smoking Initiation Rates
The cigarette tax will have significant public health impacts. The higher cost of cigarettes will deter youth and adults from starting to smoke, encourage individuals to quit smoking, and reduce cigarette consumption among continuing smokers. This is particularly true for adolescents, young adults, and low-income people who are more sensitive to price factors.
As with most consumer products (including addictive products), the demand for cigarettes is expected to decrease when price is increased. Over the past decade, many states have raised their cigarette tax rates. These tax increases significantly reduced cigarette consumption in every one of these states. Economic studies show that a 10% increase in the price of cigarettes will reduce overall smoking among adults by approximately 4%. The U.S. General Accounting Office has estimated that smoking rates among youth will decline by 7-12% for every 10% increase in the price of cigarettes.
Cigarette price increases are most effective in reducing youth smoking rates when integrated into a comprehensive tobacco prevention and control program. Youth smoking rates declined significantly in Oregon, California, and Massachusetts as a result of the combined effect of a tax increase and a strong tobacco control program.
For Washington state, a $0.60 tax increase (or 15% price increase) should result in a 10.1% decline in youth smoking and prevent over 33,300 kids from smoking. The effect of the price increase combined with the implementation of a fully funded tobacco prevention and control program should result in even further health and economic savings.
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